Brands must exploit new gadgets boom

10 January 2012

NEW YORK: Consumers around the world are set to buy a record number of electronics products like smartphones and tablets this year, providing fresh opportunities for marketers.

GfK, the research firm, and the Consumer Electronics Association, the industry body, estimated that shoppers would spend $1tr on technology devices in 2012, up from $993bn in 2011.

Mature markets will deliver $557bn of this year's total, a lift from $552bn on an annual basis. Fast-growth economies should yield $482bn, measured against $370bn over the previous 12 months.

By category, smartphones are pegged to supply 22% of value sales in 2012, a lift of four percentage points on 2011. Traditional mobile phones will see a decline of two percentage points, to 8%.

According to the GfK/CEA report, tablet revenues reached $39bn in 2011, and are expected to enjoy a double-digit expansion in 2012, as their share of sector sales increases from 4% to 5%.

"This is going to be the year of the superphone and the Android tablets," Jen-hsun Huang, CEO of Nvidia, the chipmaker, said.

At the premium end of the spectrum, operators like Intel are hoping Ultrabooks – the next generation of extremely thin and lightweight laptops currently costing around $1,000 – could be a major source of new revenue.

"The problem is the price point," Rick Sherlund, an analyst at Nomura, suggested, adding that the $600-mark would be the threshold where interest was likely to grow rapidly among shoppers.

In evidence of the rising integration between channels, Vizio, the biggest TV manufacturer in the US, now makes connected televisions, tablets, smartphones and PCs, alongside rolling out "standardised" 3D glasses for use at home.

"They use the same standard as the movie theatres, they're much more comfortable for consumers, they don't have to be charged and they don't cost $150 a piece," Matthew McRae, Vizio's chief technology officer, said.

As well as rising demand, falling prices will fuel growth. The launch of cheaper tablets like the Kindle Fire is one example, while the CEA stated the price of typical TV set fell 7% in 2011, and may contract by 5% in 2012.

"Access points are becoming so affordable," Richard Doherty, an analyst at Envisioneering, the insights group, said. "It will reduce consumer indecision and lead to higher sell-through at retail."

Data sourced from GfK/Financial Times; additional content by Warc staff